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EARNINGS

Changes Put Viejo Bancorp in the Black

January 08, 1987|JAMES S. GRANELLI

Viejo Bancorp and its only subsidiary, Mission Viejo National Bank, posted consolidated net income of $1.4 million for 1986, a big turnaround from the $1.9-million loss incurred in 1985.

The company's unaudited financial statement shows that most of the net income came in the last quarter, when it earned nearly $1.1 million, compared with the previous year's fourth-quarter loss of $583,000.

The Mission Viejo-based company's earnings were affected by about $500,000 in non-recurring charges for legal and consulting fees and loan losses, said William T. Brady, Viejo Bancorp's chairman and largest stockholder with 25% of the shares.

Last spring, Viejo's president, Jack Barnes, had predicted that the bank would earn $500,000 to $1.5 million for the year.

"Our main income was developed from mortgage banking," Barnes said. "It's basically where we made all our money, and we're going to continue doing that."

Originally a stockholder and director, Barnes became the bank's president and chief executive officer in September, 1985--the third leader in a troubled year for the bank. He mapped out a cost-cutting plan that included a 39% reduction in fringe benefits and salaries--to a total of $85,000 a month--for the bank's employees, and also initiated employee bonus and stock option plans, which he said helped to boost the morale of the 49 employees.

The revamped bank responded. Assets at the end of the year more than doubled to $50.3 million from $23.9 million a year earlier. Deposits doubled to $46.9 million from $23.3 million, and gross loans grew 84.2% to $36.1 million from $19.6 million.

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